Is rental car insurance worth it?

When you are offered a rental car insurance by the car rental company, you should know exactly what your own insurance or credit card covers if anything goes wrong with your rental car.

Most likely if you have your own auto insurance, purchasing any additional rental insurance would be unnecessary. If your credit card company include rental coverage, it would pay for the physical damage to your rental car itself. Any liability coverage is excluded, however.

If you don’t have a personal auto insurance policy, it’s in your best interest to look into the insurance coverages that a rental company offers. The coverages are usually reasonably priced and you must pay by day. Let’s break down the coverage options.

1. Liability

It covers any property damage caused to others when you are driving the rental car. This includes any medical expenses of injured persons in the other car.

2. Physical Damage Waiver

Also known as Collision Damage Waiver or Loss Damage Waiver. It will remove the responsibility for damage to the rental car and take care of any damage done to the rental vehicle.

3. Personal accident insurance

This coverage will protect you and your passengers in case any of you have injuries and incur any medical costs if you are involved in an accident. Though a little bit expensive, if you don’t have personal auto insurance, this is the easiest way to obtain protection.

4. Personal effects

This coverage takes care of anything in your car that you may lose if the car is broken into or stolen, such as a laptop.

Now let’s discuss some situations you may fit into and see what coverage you should buy.

  • You only have liability coverage in your personal auto insurance plan: If you don’t have comprehensive or collision coverage under your current insurance carrier, you may want to consider the loss-damage waiver. Let’s say your rental car is damaged by a hail or stolen, the loss-damage waiver will cover the rental car.
  • You don’t own a car/car insurance: In this case, you should consider purchasing all the above coverages to ensure you’ll be well protected in the event of an accident.
  • You have a high deductible on your personal auto insurance: Most likely you already have sufficient health coverage since it is currently mandatory across the United States. But rental companies might offer personal accident insurance with little to no deductible, which can save you some money should you have an accident.
  • You don’t have homeowner’s or renter’s insuranceUsually personal effects are covered by homeowner’s or renter’s policy. But if you don’t have one and travel with valuable belongings,  it’s wise to buy personal effects coverage to protect your loss.
  • You’re traveling abroad: Most auto insurance policies do not cover accidents happen abroad. Be prepared to purchase some coverages from the abroad rental company.

Another thing worth mentioning is that if you have auto policy from GEICO, Assurance, Allstate or State Farm, you can check with the customer service department about their rental coverage. Usually it’s very cheap and will  reimburse you in the event that you need to rent a car because vehicle is being repaired. Not only that, they may cover lodging reimbursement in the event that you’re away from home when your car needs to be serviced.